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The EU is launching a probe into the aluminium market in a move to protect the bloc’s beleaguered industry from an expected surge in cheap imports displaced by Donald Trump’s tariffs.
The European Commission on Wednesday will announce the probe, aimed at verifying a sudden surge in imports and targeting all trading partners, according to a document seen by the Financial Times. It will also tighten loopholes in its tariff regime on steel imports.
Last week, Donald Trump placed 25 per cent tariffs on all steel and aluminium imports, with the EU promising to retaliate with tariffs on up to €26bn of US products.
“The situation is also deteriorating in the aluminium sector,” the document reads. EU producers “lost substantial market share over the past decade” and production has not recovered since the Covid-19 pandemic, the commission said, a situation aggravated by high energy prices, sluggish demand and cheap imports from Russia and other parts of the world.
“The recently announced US tariffs on aluminium are likely to worsen the situation further with a significant threat of trade diversion from multiple destinations,” it added.
Other than Norway and Iceland, which are part of the bloc’s economic area and could be subject to an exemption, the main source countries for aluminium are the United Arab Emirates, Russia and India.
Russian imports have been decreasing since Moscow’s full-scale invasion of Ukraine in 2022, to just 6 per cent of the total last year. The EU last month decided to phase out Russian aluminium imports completely by 2026 and, in the meantime, expand tariffs that only applied to a share of those imports.
While the US has used security grounds to justify its measures, the EU will use traditional trade defence law based on WTO rules. It could match measures placed on steel since 2018. They set import quotas, with 25 per cent tariffs on any metal above that.
The commission document also says it will ensure adequate protection for the steel industry after June 2026, when safeguards must expire. The bloc’s steel production in 2023 was the lowest since records began, with the exception of the pandemic years.
Pressure on the industry was “likely to be exacerbated” as other countries raise tariff barriers to keep out Chinese metal blocked by the US, the commission said. The EU could become the “main receiving ground of global excess capacities”.
The commission will expand its measures to prevent China using third countries to circumvent them. The document introduces a “melted and poured” rule, which would prevent metal produced in a country subject to tariffs but processed elsewhere to circumvent the levies.
The commission will also consider a plan to hit countries that restrict exports of scrap metal to the EU with a reciprocal ban. EU scrap steel exports have more than doubled in recent years to account for 20 per cent of production, denying steelmakers a raw material.
The draft metals action plan, which could still change before publication, was first reported by Table Media.
The action plan also promises greater protection under the carbon border tax that comes into force next year.
The carbon border adjustment mechanism (CBAM) will place a levy to account for the carbon used to create steel, aluminium and several other goods, since EU producers have to pay for emissions.
CBAM will be extended to some products made from the metals, it said.
There will also be attempts to help the industry reduce its carbon emissions. Companies have complained that they cannot afford to invest in new technology such as hydrogen powered blast furnaces. The steel industry estimates it must spend €14bn annually until 2030 to decarbonise. “Most of these projects are not likely to be economically feasible in the current environment”, the document says.
The commission advocates member states reducing energy taxes for heavy industry and providing greater subsidies for hydrogen.
It will also encourage customers to buy green steel, which is more expensive than conventional supply, by changing procurement rules and setting resilience and sustainability measures for many industrial products.
The commission declined to comment on the proposal but said:
“We announced that the upcoming Action Plan will indicate additional sector-specific priority actions as well as long-term measures to replace trade defence safeguard measures expiring in June 2026.”
Read the full article here
